By Oz

A new class-action pyramid lawsuit was filed against Premier Financial Alliance earlier this year.

In addition to covering that, today we’re also revisiting the original 2018 Premier Financial Alliance pyramid lawsuit.

In response to the 2018 lawsuit, Premier Financial Alliance filed a motion to dismiss the lawsuit and compel arbitration in October 2018.

Following the filing of an amended complaint, a second motion to dismiss and compel arbitration was filed later that same month.

On November 28th defendants A JW Production, LLC, Bill Hong, The Consortium Group, LLC, Jack Wu, Rex Wu, and Lan Zhang, filed their own motion requesting the same.

On January 22nd, 2019, the court denied both motions.

Based on the evidence submitted, the court ruled that the Premier Financial Alliance defendants had ‘failed to establish the existence of an agreement to arbitrate‘

Defendants have failed to meet their burden to show, by undisputed material facts, that the parties entered into an agreement to arbitrate the claims here.

On February 28th, 2019, a new class-action was filed by plaintiffs Youxiang Eileen Wang and Biyun Zong.

Wang and Zong, both New Jersey residents, claim Premier Financial Alliance is a “pyramid scheme” they were “lured” into.

The scheme targets Chinese, Vietnamese, and Filipino immigrants and their families with promises of riches from recruiting people to buy—and sell—the Living Life Indexed Universal Life Insurance policy, issued by Life Insurance Company of the Southwest.

The business model described in the lawsuit is that of your typical “no retail” MLM pyramid scheme.

Although prospective associates are told they will be able to maintain their own insurance business, the policy bought and sold through the pyramid is significantly overpriced.

Premier Financial Alliance instructed Plaintiffs and continues to instruct other “associates” to peddle this policy to other people who, in turn, are instructed to sign up more associates, and so on and so on, ad infinitum.

Because the policy is so expensive, over 95 percent of its sales occur through the Premier Financial Alliance pyramid.

If that 95% figure is anywhere remotely accurate, Premier Financial Alliance appears to be a prime target for an FTC shutdown.

In BehindMLM’s own May 2016 Premier Financial Alliance review, I opined

If Premier Financial Alliance is indeed an MLM company full of affiliates earning commissions based on how much their recruited downlines are spending each month – that’s a problem.

Sounds like that exactly what’s going on.

On the original 2018 pyramid scheme case docket, an administrative motion was filed on March 19th.

The motion sough to relate the 2018 and 2019 cases, and was granted on March 26th.

This means that the same Californian Judge will hear both cases.

On May 6th an initial case management conference for both cases was held.

At the hearing defendants Life Insurance Company of the Southwest, National Life Insurance Company, NLV Financial Corporation and National Life Holding Company were granted a motion to dismiss.

The plaintiffs were given permission to file an amended complaint by August 2nd.

However the same order also stayed the case, pending outcome of a motion to compel arbitration in the 2019 pyramid case.

The last significant filing in the 2018 case is a May 28th motion by the Premier Financial Alliance defendants,

The motion requests permission to seek reconsideration of the earlier arbitration denial decision, or in the alternative a transfer of the case to Georgia.

Plaintiffs Gonzales and Chen have opposed the motion, and a hearing to decide the matter has been scheduled for July 19th.

Switching over to the 2019 case, the motion to compel arbitration that stayed the 2018 case was filed by Premier Financial Alliance on May 28th.

A hearing to decide the arbitration matter was scheduled for July 19th.

As per a July 1st order however, the hearing was continued till August 20th.

To sumarize, Premier Financial Alliance is facing two separate lawsuits that accuse it of being a pyramid scheme.

The most damning allegations in the new 2019 lawsuit are the targeting of Asian immigrants, and claim that 95% of sales within Premier Financial Alliance are affiliate purchases.

Once they pay the $125 membership fee and buy the Living Life IUL policy, Premier Financial Alliance associates are pressured to recruit and sell the policy within their network of friends and family members, typically from the same immigrant group.

Because the Living Life IUL policies are far more expensive than National Life Group’s non-Premier Financial Alliance policy alternatives, Premier Financial Alliance agents are unable to sell these Living Life IUL policies outside of the Premier Financial Alliance pyramid.

Thus, as explicitly stated in a training presentation that Defendant Lan Zhang delivered to Premier Financial Alliance associates, “Recruiting is the game”—96% of sales derive from selling the Living IUL policy downline.

Lan Zhang appears to be a top Premier Financial Alliance affiliate.

A 2016 video cites Zhang as a Premier Financial Alliance “President”, and depicts her receiving a “special birthday present” from PFA founder and CEO, David Carroll.

I’ll be checking in for updates on both cases on July 19th, after which our next scheduled case update will be on or around August 20th.

Stay tuned…

A recently filed RICO class-action lawsuit alleges Premier Financial Alliance is a “particularly egregious classic pyramid scheme”.

The June 25th class-action lawsuit was filed by Plaintiffs Rui Chen and Wenjian Gozales in California.

Chen joined Premier Financial Alliance in 2017 and Gonzales in late 2017 or early 2018.

Both claim to have been deceived into believing PFA was a “legitimate way to make money”.

Defendants named in the lawsuit include Premier Financial Alliance, David Caroll (CEO and Founder), Jack Wu (“chairman and ringleader”) and his company AJW Productions, Rex Wu (field chairman), Lan Zhang (an “original member” of PFA), Bill Hong (conspirator).

PFA, Carroll, J. Wu, R. Wu, Hong, Zhang, AJW, by their authorization promote the pyramid scheme and make misleading claims of financial success.

To sell the financial-success promise, PFA, Carroll, J. Wu, R. Wu, Hong, Zhang, and AJW flaunt the wealth of the highest-ranked Associates and those few insiders at the top of the pyramid, as examples of the riches that await new participants, if only they will work hard enough (i.e., tirelessly recruit new Associates).

The wechat (a popular social networking platform), instagram, facebook, and twitter posts made during the class period boast of luxury vehicles, grandiose trips, expensive fine dining.

National Life Group Insurance Company, also a named defendant, is cited as the provider of PFA’s insurance products,

with complete knowledge that the Defendants have violated Department of Insurance Guidelines and the anti-pyramid laws, but aided and abetted the conduct of National’s co-defendants.

According to Chen and Gonzales, ‘100% of (Premier Financial Alliance’s) revenues (comes) from chain recruitment‘.

To earn any commissions or financial rewards in PFA, one has to recruit and cause to be signed up, six persons, and obtain a license to sell insurance under applicable State Law.

This, the lawsuit states, comes at the expense of selling insurance policies to retail customers.

The end result?

Premier Financial Alliance affiliates are promised

they will earn vast wealth, luxury vehicles, and lavish trips when in reality … more than 95% of PFA Associates average net losses.

No persons, except the promotors and operators of the Premier Financial Alliance scheme make any money.

A specific example cited in the lawsuit is a representation allegedly made by PFA, by which

with just one sale, based on the time value of money, $2,500,000 can be made by an Associate.

BehindMLM reviewed Premier Financial Alliance in 2016.

In our review we found an astonishing lack of information provided to potential PFA retail customers or indeed, whether retail sales were even possible at all.

This naturally raised the question of what Premier Financial Alliance’s core priority was.

Chen and Gonzales’ lawsuit attributes the lack of retail disclosure to PFA

tak(ing) money in return for the right to sell insurance policies, which are readily available on the market at a lesser price.

PFA themselves don’t sell the insurance policies, hence the lawsuit claim that Premier Financial Alliance has ‘never marketed or sold insurance policies to any retail customers‘.

The principal focus is on recruiting.

For instance, the Defendants market and advertising in their materials, reports, scoreboards, and charts that a Career

Associate is urged to recruit at least “three people and submit three sales of minimum 9,000 points in the first thirty days of joining PFA.”

No marketing is done to retail customers.

Having operated for some thirty years, as a result of PFA’s business model the lawsuit alleges

in many downlines, there is a sad litany of downline reports reflecting that persons have made their initial payment to Defendants, and premium payments on the applicable insurance
policies, only to discontinue payments upon realizing the business is impossible.

What is described in the lawsuit of PFA business model is that of your typical autoship recruitment scheme.

Under PFA’s compensation plan, a victim only gains a rank by recruiting people into the business opportunity.

The business opportunity is focused on recruiting people, and have them purchase 100 “points” in volumes.

The price of the product is so high compared to comparative market prices that it is impossible to legitimately sell these products retail, except to friends and families.

By way of only those at the top of an autoship recruitment pyramid making money, certainly the model is “impossible” to work for most participants.

Plaintiff’s Gonzales and Chen are seeking to represent a class of similarly situated Premier Financial Alliance victims, of whom they estimate there are over 25,000.

Premier Financial Alliance affiliates who qualify for the class-action include any who signed up from June 25th, 2014 and ‘paid more to the scheme than the amount of money they received from PFA‘.

Stated aims of the class-action include establishing

• whether Defendants are operating an endless chain;
• whether Defendants’ omitted to inform the Plaintiff and the plaintiff class that they were entering into an illegal scheme where an overwhelming number of participants lose money;
• whether PFA’s statements of income during the Class Period were deceptive and misleading;
• whether PFA’s conduct constitutes an unlawful, unfair and/or deceptive trade practice under California state law;
• whether PFA’s conduct constitutes unfair competition under California state law;
• whether PFA’s conduct constitutes false advertising under California state law and;
• whether the Defendants violated the Department of Insurance Guidelines in representing the benefits under a policy and/or underwriting.

Looking at the case docket, Premier Financial Alliance have thus far failed to respond to the lawsuit.

Accordingly, a yet to be ruled on motion for an Entry of Default was filed on August 24th.

We’ve added the lawsuit to our list of cases we’re following, so stay tuned for further updates as the case progresses.